The Financial Conduct Authority (“FCA”) has described a discretionary commission arrangement (“DCA”) as an arrangement between lenders and brokers which allowed the broker to adjust the interest rates offered to customers. Typically, the higher the interest rate, the more commission the broker received. This practice was banned by the FCA in 2021, however they are now undertaking a review of the industry to understand whether there has been a widespread failure to comply with relevant requirements, resulting in financial loss or harm to consumers.
You may have an eligible DCA complaint if:
- You used car finance to buy a car before 28 January 2021, this includes conditional sale agreements and fixed-sum loan agreements.
- A discretionary commission arrangement was operated in relation to your agreement.
If you have an eligible DCA complaint, you will not receive a final response within the usual 8-week deadline. The FCA has extended the deadline until 25 September 2024.
If you’re unhappy with our final response, you’re able to take your complaint to the Financial Ombudsman Service (“FOS”). Usually, you have six months from the date of our final response letter to refer your complaint, however, as a result of the pause to complaint handling, this has been extended by up to 15 months.
For further information, you can visit the announcement on the FCA’s website here.
To make a complaint to us in relation to a DCA, please complete the below form:
FAQ’s
The FCA have defined a discretionary commission arrangement (“DCA”) as a commission arrangement in which lenders allowed brokers (the person that arranges the loan, for example, your car dealer) to adjust the interest rates they offered customers for car finance. Typically, the higher the interest rate, the more commission the broker received.
If you submit a complaint to us, we’ll investigate your complaint in line with our complaints handling process. As part of this, we will assess whether a DCA was in use when you took out your agreement. If a DCA was in use, we won’t issue you with a final response yet as a result of the pause requested by the FCA on complaints handling.
If a DCA was not in use, we’ll handle your complaint in line with our normal process.
The FCA is undertaking a review of the industry to understand whether there has been a widespread failure to comply with relevant requirements, resulting in financial loss or harm to consumers. Until they have completed their work and finalised their review, they are not able to say whether this is the case or not.
You will receive a final response from 25 September 2024 in line with the FCA pause whilst they complete their review.
You can refer your complaint to the Financial Ombudsman Service (“FOS”) within 15 months of having received your final response (if you have an eligible DCA complaint).
No, personal contract hire agreements don’t fall within scope of the FCA review and are not impacted.
Please contact our dedicated team on 0800 085 2050.